Protection against political & credit risks

Political risks relate to political, social or security-related changes that may have a tangible impact on the interests and business activities of a company, a financial institution, a bank or investors.

This includes various scenarios such as conflicts, civil unrest, or even civil wars. Additionally, it involves political choices that could hinder transactional processes, such as blocked asset transfers, confiscations, authorities' unilateral refusal to fulfill obligations, embargoes, nationalizations, expropriations, and more.

Political risks are an essential component of project risks. This applies in particular to large-scale industrial projects in unstable regions, emerging countries or in an environment with a deteriorating security situation.

Coface's insurance policies cover the following risks:

• non-payment
• unlawful termination of contract
• non-delivery of goods
• confiscation of assets
• non-transfer of dividends
• non-repayment of credit terms
• License cancellation, etc.

The country risk assessment offers insights into the typical payment conduct of businesses within a specific country, relating to their short-term business dealings. This evaluation offers a more precise gauge of how a nation's economic, financial, and political circumstances, alongside its commercial environment, impact the payment conduct of companies.

The assessment is based on three key areas:

• an analysis of macroeconomic, financial and political factors
• an assessment of the business environment by Coface entities worldwide
• and Coface's payment experience as recorded in its global database.

The evaluation covers 162 countries and employs an 8-tier classification: A1, A2, A3, A4, B, C, D, and E, ascending in terms of risk. Coface's assessments of country risk are refreshed every quarter and can be accessed at no cost on our website.

This information is particularly useful for companies that want to expand internationally - for example, in emerging markets - and need insurance for political risks and credit risks.

Credit risk refers to the potential that a debtor might fail to settle their outstanding receivables, whether in part or in full. This risk materializes when a company purchases goods or services from another business or enters a lending arrangement with a bank or financial institution.

The creditworthiness of debtors is influenced not solely by internal factors but also by external contexts like geographical location (country risk), the global economic climate, sectoral growth projections (sectoral risk), and even political risks. As a credit insurance expert, Coface consistently evaluates credit risk to furnish its clients with a comprehensive insight.